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Whitehaven Coal’s fiscal 2023 result was another record given high prices. Net profit after tax of $2.7 billion, or $3.03 per share, was up 37% on last year and 8% above our expectations. Earnings before interest, taxes, depreciation and amortisation (“EBITDA”) rose 30% to about $4 billion while Whitehaven generated significant free cash flow of $3.3 billion, or $3.75 per share. The average coal price of $445 per metric ton, also 37% higher than the $325 last year, drove the record result with coal sales volumes down 8%. Along with inflation, lower volumes saw unit costs rise 23%, to $103 per metric ton. The $0.42 per share fully franked dividend was more than we expected, taking total 2023 dividends to $0.74. Including share repurchases, the payout ratio of 50% was at the top end of the target range.
We retain our $9.50 per share fair value estimate for Whitehaven and still see it as undervalued. We think this is due to the market assuming thermal coal prices fall from elevated levels relatively quickly. However, we think Whitehaven’s generally high-quality coal—high energy, low ash—is likely to remain in demand in Southeast Asia in particular. It helps meet energy needs while reducing emissions relative to lower-quality coals.
There is a risk New South Wales will increase royalty rates in coming years. Offsetting much of this risk is a potential extension of the state’s coal reservation policy, which Whitehaven could satisfy by selling its lower-quality coal. Increased royalty rates could also create a headwind to new supply, which could inflate long-term or midcycle thermal coal prices above our assumed USD 90 per metric ton from 2027. However, assuming none of these benefits arise, if royalty rates rise to 10% from the roughly 7.5% Whitehaven pays now, our fair value estimate falls to $9.00 per share. Royalty rates of 12.5% and 15% see our fair value estimate fall to $8.50 and $8.00, respectively. Alternatively, it falls to $8.90 using Queensland’s punitive royalty rates.
Our $12.30 fair value for Santos stands. Australia's second-largest oil and gas producer reported a 37% decline in first-half 2023 underlying NPAT to $801 million US or $0.36 per share, considerably ahead of our USD 706 million expectations. It was a strong result in the face of weakening energy prices, though we read no long-term implication from the fact. Revenue declined 22% to $3.0 billion US, with average pricing down 7% to $62.60 US per barrel of oil equivalent and production down 13% with Darwin LNG in runoff and a temporary shutdown of the John Brookes platform in Western Australia.
The beat reflects lower-than-expected operating costs and tax, partially offset by higher-than-anticipated depreciation. The margin on third-party sales was higher than we expected, and administrative costs were lower. Despite the strong first half, our 2023 EPS is little-changed at $0.68. We have tempered margin expectations for the second half given the inflationary environment. Santos hasn't changed any 2023 guidance, including for production of 89-93 million barrels of oil equivalent, or mmboe. We still sit at a high-end 93mmboe, with Santos having produced just over 45mmboe in the first half. Capital expenditure guidance for 2023 is unchanged at $2.7-2.8 billion US.
Santos declared an interim dividend up 14% to $8.7 US cents per share on a 36% payout. This was ahead of our $7.9 US cent expectations, and we increase our full-year target slightly to $15.5 US cents from $15.0 US cents. It still equates to a middling yield of 3.1% at the current share price. Somewhat surprisingly there was no franking with the first half dividend though we still anticipate partial franking with the second half.
Effective delivery of the Barossa project is a key potential catalyst for price appreciation toward fair value. So, too, is progress on the Papua LNG project in PNG.
TPG Telecom's earnings recovery is gaining traction, as evidenced by the 12% rise in first-half 2023 adjusted EBITDA to $974 million. The 9% growth in postpaid mobile revenue deservedly attracted attention, propelled by price increases during the half that lifted underlying ARPU by 8% to $42.50. This played a big role in the 7% increase in consumer EBITDA to $669 million. Despite carrying the burden of margin-crunching fixed broadband, first-half consumer EBITDA margin lifted 120 basis points to 30.3%.
The 24% jump in enterprise, government, and wholesale EBITDA to $298 million was also notable. The benefits of growing the top line in high-margin, fiber-heavy businesses were clearly evident, with EBITDA margin hitting 53.5%, from 49.6% a year ago. Quality and maintainability of these fundamentals are clearly under Vocus' microscope during the current due diligence process, as it mulls an offer for this unit.
Having said that, the first-half progress was largely in line with our expectations. Our 2023 adjusted EBITDA projection is lifted just 1% to $1.939 billion, within management's guidance range of $1.925 billion to $1.950 billion. We are bemused by management's characterization of the guidance as an upgrade, given it is merely a tightening of the prior $1.850 billion to $1.950 billion range. But it clearly shows the firm recovery trajectory that TPG is on, up from the low point of $1.731 billion in 2021. Our five-year EBITDA CAGR projection remains at 6%.
Shares in TPG remain at a material discount to our unchanged $7.40 fair value estimate. The Vocus overture highlights the underappreciated value of the group's fixed-line fiber infrastructure. The first-half result shows the solid earnings recovery in progress. And the 100-basis-point increase in return on invested capital to 6.1% testifies to management's commitment to improving the one key metric that all telecom operators are finally focusing on.
Analysis as at 30 August 2023. This information has been provided by Morningstar Australasia (ABN: 95 090 665 544, AFSL 240892), for WealthHub Securities Ltd ABN 83 089 718 249 AFSL No. 230704 (WealthHub Securities, we), a Market Participant under the ASIC Market Integrity Rules and a wholly owned subsidiary of National Australia Bank Limited ABN 12 004 044 937 AFSL 230686 (NAB). NAB doesn't guarantee the obligations or performance of its subsidiaries or the products or services its subsidiaries offer. Whilst all reasonable care has been taken by WealthHub Securities in reviewing this material, this content does not represent the view or opinions of WealthHub Securities. Any statements as to past performance do not represent future performance. Any advice contained in the Information has been prepared by WealthHub Securities without taking into account your objectives, financial situation or needs. Before acting on any such advice, we recommend that you consider whether it is appropriate for your circumstances.